[Draft of January 23, 1995]
15,170,000 Shares
CALIFORNIA ENERGY COMPANY, INC.
Common Stock
SUBSCRIPTION AGREEMENT
London, England
_____, 1995
To: CS FIRST BOSTON LIMITED
Bear, Stearns International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
Deutsche Bank Aktiengesellschaft
Lehman Brothers International (Europe)
c/o: CS FIRST BOSTON LIMITED ("CSFBL")
One Cabot Square
London, England E14 4QJ
Dear Sirs:
1. Introductory. California Energy Company,
Inc., a Delaware corporation ("Company"), proposes to issue
and sell to the several Managers named in Schedule A hereto
("Managers") 4,000,000 shares ("International Firm
Securities") of its Common Stock, par value $.0675 per share
("Securities").
It is understood that the Company is concurrently
entering into an Underwriting Agreement, dated the date
hereof ("Underwriting Agreement"), with certain United
States underwriters listed in Schedule A thereto (the "U.S.
Underwriters"), for whom CS First Boston Corporation
("CSFBC"), Bear Stearns & Co. Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, C.J. Lawrence/Deutsche Bank
Securities Corporation and Lehman Brothers Inc. are acting
as representatives (the "U.S. Representatives"), relating to
the concurrent offering and sale of 11,170,000 shares of
Securities ("U.S. Firm Securities") in the United States and
Canada ("U.S. Offering").
In addition, the Company proposes to issue and
sell to the U.S. Underwriters and the Managers, an option
exercisable by CSFBC for an aggregate of not more than
2,275,000 additional shares of Securities ("Optional
Securities"; the Optional Securities for the U.S. Offering
are referred to as the "U.S. Optional Securities" and the
Optional Securities for the Offering outside the United
States and Canada are referred to as the "International
Optional Securities"). The U.S. Firm Securities and the
U.S. Optional Securities are hereinafter called the "U.S.
Securities"; the International Firm Securities and the
International Optional Securities are hereinafter called the
"International Securities"; the U.S. Firm Securities and the
International Firm Securities are hereinafter called the
"Firm Securities". The U.S. Securities and the
International Securities are collectively referred to as the
"Offered Securities". To provide for the coordination of
their activities, the U.S. Underwriters and the Managers
have entered into an Agreement Between U.S. Underwriters and
Managers which permits them, among other things, to sell the
Offered Securities to each other for purposes of resale.
The Company hereby agrees with the several
Managers as follows:
2. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, the
several Managers that:
(a) A registration statement on Form S-3 (No. 33-
57191) relating to the Offered Securities, including a
form of prospectus relating to the U.S. Securities and
a form of prospectus relating to the International
Securities being offered in the International Offering,
has been filed with the Securities and Exchange
Commission ("Commission") and either (i) has been
declared effective under the Securities Act of 1933
("Act") and is not proposed to be amended or (ii) is
proposed to be amended by amendment or post-effective
amendment. If the Company does not propose to amend
such registration statement and if any post-effective
amendment to such registration statement has been filed
with the Commission prior to the execution and delivery
of this Agreement, the most recent such amendment has
been declared effective by the Commission. For
purposes of this Agreement, "Effective Time" means
(i) if the Company has advised the Representatives that
it does not propose to amend such registration
statement, the date and time as of which such
registration statement, or the most recent
post-effective amendment thereto (if any) filed prior
to the execution and delivery of this Agreement, was
declared effective by the Commission, or (ii) if the
Company has advised the Representatives that it
proposes to file an amendment or post-effective
amendment to such registration statement, the date and
time as of which such registration statement, as
amended by such amendment or post-effective amendment,
as the case may be, is declared effective by the
Commission. "Effective Date" means the date of the
Effective Time. Such registration statement, as
amended at the Effective Time, including all material
incorporated by reference therein and including all
information (if any) deemed to be a part of such
registration statement as of the Effective Time
pursuant to Rule 430A(b) under the Act, is hereinafter
referred to as the "Registration Statement", and the
form of prospectus relating to the U.S. Securities and
the form of prospectus relating to the International
Securities, each as first filed with the Commission
pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Act or (if no such filing is
required) as included in the Registration Statement,
including all material incorporated by reference in
each such prospectus, are hereinafter referred to as
the "U.S. Prospectus" and the "International
Prospectus", respectively, and collectively as the
"Prospectuses".
(b) If the Effective Time is prior to the
execution and delivery of this Agreement: (i) on the
Effective Date, the Registration Statement conformed in
all material respects to the requirements of the Act
and the rules and regulations of the Commission
thereunder and did not include any untrue statement of
a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and (ii) on the date
of this Agreement, the Registration Statement conforms,
and at the time of filing of each of the Prospectuses
pursuant to Rule 424(b), the Registration Statement and
each of the Prospectuses will conform, in all respects
to the requirements of the Act and the rules and
regulations of the Commission thereunder, and none of
such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein
or necessary (with respect to the Prospectuses, in the
light of the circumstances under which they were made)
to make the statements therein not misleading. If the
Effective Time is subsequent to the execution and
delivery of this Agreement: on the Effective Date, the
Registration Statement and each of the Prospectuses
will conform in all respects to the requirements of the
Act and the rules and regulations of the Commission
thereunder, and none of such documents will include any
untrue statement of a material fact or will omit to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading. The two preceding sentences do not apply
to statements in or omissions from the Registration
Statement or either of the Prospectuses based upon
written information furnished to the Company by any
Manager through CSFBL or by any U.S. Underwriter
through the U.S. Representatives specifically for use
therein, it being understood and agreed that the only
such information is that described as such in
Section 7(b).
(c) The documents incorporated by reference in
the Registration Statement and the Prospectuses, when
they became effective or were last amended or filed
with the Commission, as the case may be, conformed in
all material respects to the requirements of the Act or
the Securities Exchange Act of 1934 as amended
("Exchange Act"), as applicable, and the rules and
regulations of the Commission under the Act and the
Exchange Act, as applicable ("Rules and Regulations"),
and none of such documents contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein not misleading
in light of the circumstances under which they were
made, and any further documents so filed and
incorporated by reference in the Prospectuses, when
such documents become effective or are filed with the
Commission, as the case may be, shall conform in all
material respects to the requirements of the Act or
the Exchange Act, as applicable, and the Rules and
Regulations of the Commission and shall not contain
an untrue statement of a material fact or omit to state
a material fact required to be stated therein or
necessary to make the statements therein not misleading
in light of the circumstances under which they were
made.
(d) The Company, each Subsidiary (as defined
below) and each Joint Venture (as defined below) have
been duly organized and are validly existing and, if
applicable, in good standing under the laws of their
respective jurisdictions of organization as a
corporation or partnership, as the case may be, and
have the power and authority to own, lease and operate
their property and conduct their businesses as
described in the Prospectuses; the Company, the
Subsidiaries and the Joint Ventures are duly qualified
to do business and are in good standing as foreign
corporations or foreign partnerships, as the case may
be, in each jurisdiction, domestic or foreign, in which
such registration or qualification or good standing is
required (whether by reason of the ownership or leasing
of property, the conduct of business or otherwise),
except where the failure to so register or qualify or
be in good standing is not reasonably likely to have a
material adverse effect on the financial condition,
business or results of operations of the Company, its
Subsidiaries and Joint Ventures taken as a whole; and
the Company has all requisite corporate power and
authority to enter into this Agreement, and to
consummate the transactions contemplated hereby. For
purposes of this Agreement, (A) the term "Subsidiary"
shall mean the entities listed as such on Schedule B
hereto, and (B) the term "Joint Venture" shall mean the
entities listed as such on Schedule B hereto, it being
understood that such term means the general or limited
partnership or other joint venture entity and not the
individual general or limited partners or other joint
venturers thereof. The Subsidiaries listed on
Schedule B are all the material direct and indirect
"subsidiaries" of the Company, as such term is defined
in Rule 405 of the Rules and Regulations, and are all
of the "Significant Subsidiaries" of the Company, as
such term is defined in Rule 1-02 of Regulation S-X.
(e) The Offered Securities and all the other
issued and outstanding shares of capital stock of the
Company have been validly authorized; all outstanding
shares of capital stock of the Company are, and when
the Offered Securities have been delivered and paid for
in accordance with this Agreement and the Underwriting
Agreement on each Closing Date (as defined below) such
Offered Securities will have been, validly issued,
fully-paid and nonassessable and will conform in all
material respects to the description thereof contained
in the Prospectuses; there are no preemptive or similar
rights to subscribe for or to purchase, nor any
restriction on the transfer of, the Offered Securities
except as provided in the Shareholders Agreement dated
as of February 18, 1991 by and between the Company and
Kiewit Energy Company, as amended, in respect of which
a waiver has been received regarding the Offered
Securities; all the outstanding shares of capital stock
of each Subsidiary have been duly and validly
authorized and issued and are fully-paid and
nonassessable; and except as otherwise set forth or
referred to in the Prospectuses, all outstanding shares
of capital stock of each Subsidiary are owned
beneficially by the Company free and clear of any
material claims, liens, encumbrances and security
interests. All of the partnership interests in Joint
Ventures beneficially owned by the Company (as
reflected in Schedule B) have been duly and validly
authorized and issued and, except as otherwise
disclosed or referred to in the Prospectuses, are owned
beneficially by the Company free and clear of any
material claims, liens, encumbrances and security
interests.
(f) The authorized capital stock of the Company,
including the Offered Securities, conforms as to legal
matters in all material respects to the description
thereof contained in the Prospectuses.
(g) Except (i) in respect of the agreement
between the Company and Gleacher & Co., Inc.
("Gleacher"), dated December 22, 1994, whereby Gleacher
will be entitled to, among other things, a success fee
("Success Fee") in the amount of 20% of the total
underwriting fee (not to exceed $250,000), and (ii) as
otherwise disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the
Company and any person that would give rise to a valid
claim against the Company or any U.S. Underwriter or
Manager for a brokerage commission, finder's fee or
other like payment.
(h) There are no contracts, agreements or
understandings between the Company and any person
granting such person the right to require the Company
to file a registration statement under the Act with
respect to any securities of the Company owned or to be
owned by such person or to require the Company to
include any such securities in the securities
registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other
registration statement filed by the Company under the
Act except for the registration rights agreement dated
February 18, 1991, as amended by Amendment No. 1, dated
June 19, 1991, between the Company and Kiewit Energy
Company and the registration rights agreement dated
June 19, 1991, as amended by Amendment No. 1, dated
November 20, 1991, between the Company and Kiewit
Energy Company, the rights under which have been waived
in respect of the Offered Securities.
(i) The Securities are listed on the New York
Stock Exchange and the London Stock Exchange (the
"Stock Exchanges").
(j) The execution, delivery and performance of
this Agreement and the Underwriting Agreement, and the
issuance and sale of the Offered Securities shall not
(A) conflict with the corporate charter or by-laws or
partnership agreement of the Company, any Subsidiary or
any Joint Venture, (B) conflict with, result in the
creation or imposition of any lien, charge or other
encumbrance upon any asset of the Company, any
Subsidiary or any Joint Venture pursuant to the terms
of, or constitute a breach of, or default under, any
agreement, indenture or other instrument to which the
Company, any Subsidiary or any Joint Venture is a party
or by which the Company, any Subsidiary or any Joint
Venture is bound or to which any of the properties of
the Company, any Subsidiary or any Joint Venture is
subject, or (C) result in a violation of any statute,
any rule, regulation, order, judgment or decree of any
court or governmental agency, body or authority having
jurisdiction over the Company, any Subsidiary or any
Joint Venture or any of their properties where any such
conflicts, encumbrances, breaches, defaults or
violations under clauses (B) or (C), individually or in
the aggregate, is reasonably likely to have a material
adverse effect on the financial condition, business or
results of operations of the Company, the Subsidiaries
and Joint Ventures taken as a whole. Except for (A)
the registration of the Offered Securities under the
Act, (B) such consents, approvals, authorizations,
registrations or qualifications as may be required
under the Exchange Act and applicable state securities
laws in connection with the purchase and distribution
of the Offered Securities by the U.S. Underwriters and
(C) the waiver by Kiewit Energy Company, Inc. of its
preemptive rights and its right to include securities
in the Registration Statement, which has been obtained
prior to the date of this Agreement, no consent,
approval, authorization or order of, or filing or
registration by the Company, any Subsidiary or, to the
best of the Company's knowledge, any Joint Venture
with, any court, governmental agency or third party is
required in connection with the execution, delivery and
performance of this Agreement and the Underwriting
Agreement, the consummation of the transactions
contemplated herein and therein, and the issuance,
distribution and sale of the Offered Securities as
contemplated herein and therein. The Company has
full power and authority to authorize, issue and
sell the Offered Securities as contemplated by this
Agreement and the Underwriting Agreement, respectively.
(k) This Agreement and the Underwriting Agreement
have been duly authorized, executed and delivered by
the Company.
(l) Except as disclosed in or contemplated by the
Prospectuses, the Company, each Subsidiary and each
Joint Venture holds, as applicable, good and valid
title to, or valid and enforceable leasehold or
contractual interests in, all real properties and all
other properties and assets owned or leased by each of
them that are material to the business of each such
entity, in each case free from liens, encumbrances and
defects that would materially affect the value thereof
or materially interfere with the use made or to be made
thereof by them.
(m) Except as disclosed in the Prospectuses, the
Company, the Subsidiaries and the Joint Ventures carry,
or are covered by, insurance in such amounts and
covering such risks as is customary for similarly
situated companies in the Company's, such Subsidiaries'
and such Joint Ventures' industries, respectively.
Each of the foregoing insurance policies is valid and
in full force and effect, and no event has occurred and
is continuing that permits, or after notice or lapse of
time or both would permit, modifications or
terminations of the foregoing that, individually or in
the aggregate, is reasonably likely to have a material
adverse effect on the financial condition, business or
results of operations of the Company, the Subsidiaries
and Joint Ventures taken as a whole.
(n) Except as disclosed in the Prospectuses, the
Company, each Subsidiary and each Joint Venture (i) has
obtained each license, permit, certificate, franchise
or other governmental authorization which is material
to the ownership of their properties or to the conduct
of their businesses as described in the Prospectuses
and (ii) is in compliance with all terms and conditions
of such license, permit, certificate, franchise or
other governmental authorization, except (x) in either
case where the failure to do so is not reasonably
likely to have, individually or in the aggregate, a
material adverse effect on the financial condition,
business or results of operations of the Company and
the Subsidiaries and Joint Ventures taken as a whole,
(y) permits, consents and approvals that may be
required for future drilling or operating activities
which are ordinarily deemed to be ministerial in nature
and which are anticipated to be obtained in the
ordinary course and (z) permits, consents and approvals
for developmental or construction activities which have
not yet been obtained but which have been or will be
applied for in the course of development or
construction and which are anticipated to be obtained
in the ordinary course.
(o) There is no legal or governmental action,
suit or proceeding before any court, governmental
agency, body or authority, domestic or foreign, now
pending or, to the knowledge of the Company, threatened
against, or, to the knowledge of the Company,
involving, the Company, any Subsidiary or any Joint
Venture (i) of a character required to be disclosed in
the Registration Statement which is not adequately
disclosed in the Registration Statement or (ii) that,
if determined adversely to the Company, any Subsidiary
or any Joint Venture, is reasonably likely to have,
individually or in the aggregate, a material adverse
effect on the financial condition, business or results
of operations of the Company, the Subsidiaries and
Joint Ventures taken as a whole or on the ability of
the Company to perform its obligations under this
Agreement or the Underwriting Agreement.
(p) The conditions for use of Form S-3, as set
forth in the General Instructions thereto, have been
satisfied.
(q) The Company, the Subsidiaries and the Joint
Ventures are currently conducting their respective
businesses as described in the Prospectuses.
(r) There are no contracts or other documents
that are required to be described in the Prospectuses
or filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations that have not
been described in the Prospectuses or filed as exhibits
to the Registration Statement or incorporated therein
by reference as permitted by the Rules and Regulations.
(s) There is no relationship, direct or indirect,
that exists between or among the Company on the one
hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other
hand, that is required by the Act or by the Rules and
Regulations to be described in the Prospectuses and
which is not so described.
(t) There is no labor problem or disturbance with
the persons employed by the Company, any Subsidiary or
any Joint Venture that exists or, to the knowledge of
the Company, that is threatened and that might
reasonably be expected to have a material adverse
effect on the financial condition, business or results
of operations of the Company, the Subsidiaries and
Joint Ventures taken as a whole.
(u) The Company and each person who is a member
of a group which is under common control with the
Company and its Subsidiaries and its Joint Ventures,
who together with the Company, the Subsidiaries and its
Joint Ventures is treated as a single employer ("ERISA
Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as
amended from time to time ("IRC"), or Section 4001(b)
of the Employment Retirement Income Security Act of
1974, as amended from time to time ("ERISA"), is in
compliance with all applicable provisions of ERISA and
the regulations and published interpretations
thereunder with respect to all employee benefit plans
within the meaning of Section 3(3) of ERISA which is
established, sponsored or maintained for, or on behalf
of, its current or former employees, officers or
directors by the Company, or the Subsidiaries or Joint
Ventures or any ERISA Affiliate or has at any time
within the preceding six years been established,
sponsored or maintained for, or on behalf of, its
current or former employees, officers or directors by
the Company, or the Subsidiaries or Joint Ventures or
any current or former ERISA Affiliate ("Employee
Benefit Plans"). Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the
IRC has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan
has been determined to be exempt from tax pursuant to
Section 501(a) of the IRC. No material liability has
been incurred by the Company, or the Subsidiaries or
Joint Ventures or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan. No Employee Benefit Plan
which is subject to the provisions of Title IV of ERISA
or Section 412 of the IRC ("Pension Plan") has been
terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the IRC) been incurred.
Neither the Company nor any of its Subsidiaries or
Joint Ventures nor, in the case of clauses (ii) and
(iii) hereof, any ERISA Affiliate has: (i) engaged in
a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the IRC; (ii) incurred
any liability to the Pension Benefit Guaranty
Corporation or any successor thereto ("PBGC") which
remains outstanding other than the payment of premiums
and there are no premium payments which are due and
unpaid; or (iii) failed to make a required installment
or other required payment under Section 412 of the IRC,
which in any such case in clauses (i) through (iii),
the occurrence of which results in or could reasonably
be expected to result in a material adverse effect on
the financial condition, business or results of
operations of the Company, the Subsidiaries and Joint
Ventures taken as a whole.
No "reportable event" (as defined in Section
4043 of ERISA) Termination Event has occurred or is
reasonably expected to occur with respect to any
Employee Benefit Plan which has or could reasonably be
expected to have a material adverse effect on the
financial condition, business or results of operations
of the Company and the Subsidiaries and Joint Ventures
taken as a whole. Neither the Company nor any of its
Subsidiaries, Joint Ventures or ERISA Affiliates has
incurred or expects to incur any liability under
Title IV of ERISA arising in connection with the
termination of or withdrawal from an Employee Benefit
Plan covered or previously covered by Title IV of
ERISA.
(v) None of the Company, any Subsidiary or any
Joint Venture (i) is in violation of its respective
charter, by-laws or partnership agreements, (ii) is in
default, and no event exists and is continuing that,
with notice or lapse of time or both, would constitute
such a default, in the due performance and observance
of any material term contained in any lease, license,
indenture, mortgage, deed of trust, note, bank loan or
other evidence of indebtedness or any other agreement,
understanding or instrument to which the Company, any
Subsidiary or any Joint Venture is a party or by which
the Company, any Subsidiary or any Joint Venture or any
property of the Company, any Subsidiary or any Joint
Venture may be bound or affected, which default,
individually or in the aggregate, is reasonably likely
to have a material adverse effect on the financial
condition, business or results of operations of the
Company, the Subsidiaries and Joint Ventures taken as a
whole, or (iii) is in violation of any law, ordinance,
governmental rule or regulation or court decree to
which it may be subject, which violation, individually
or in the aggregate, is reasonably likely to have a
material adverse effect on the financial condition,
business or results of operations of the Company, the
Subsidiaries and Joint Ventures taken as a whole.
(w) There has been no storage, disposal,
generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, hazardous wastes
or hazardous substances by the Company, any Subsidiary
or any Joint Venture (or, to the knowledge of the
Company, any of their predecessors in interest) at,
upon or from any of the property now or previously
owned or leased by the Company, any Subsidiary or any
Joint Venture in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order,
judgment, decree or permit, except for any violation or
remedial action which does not have, or would not be
reasonably likely to have, individually or in the
aggregate with all such violations and remedial
actions, a material adverse effect on the financial
condition, business or results of operations of the
Company, the Subsidiaries and the Joint Ventures taken
as a whole; there has been no material spill,
discharge, leak, emission, injection, escape, dumping
or release of any kind onto such property or into the
environment surrounding such property of any toxic
wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company, any
Subsidiary or any Joint Venture or with respect to
which the Company, any Subsidiary or any Joint Venture
has knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release
which does not have, or would not be reasonably likely
to have, individually or in the aggregate with all such
spills, discharges, leaks, emissions, injections,
escapes, dumpings and releases, a material adverse
effect on the financial condition, business or results
of operations of the Company, the Subsidiaries and the
Joint Ventures taken as a whole; and the terms
"hazardous wastes", "toxic wastes" and "hazardous
substances" shall have the meanings specified in any
applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(x) Neither the Company nor any Subsidiary or
Joint Venture is, and, after giving effect to the
issuance of the Offered Securities and the application
of the proceeds therefrom, shall be, an "investment
company," or, to the best knowledge of the Company
after due inquiry, a company "controlled" by an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940
Act").
(y) The Company, each Subsidiary and each Joint
Venture has filed all federal, state and local income
and franchise tax returns required to be filed through
the date hereof, or has filed extensions in accordance
with applicable law, and has paid all taxes required to
be paid through the date hereof thereon, except for
such failures to file or pay that would not,
individually or in the aggregate, be reasonably likely
to have a material adverse effect on the financial
condition, business or results of operations of the
Company and the Subsidiaries and Joint Ventures taken
as a whole, and no tax deficiency has been determined
adversely to the Company, any Subsidiary or any Joint
Venture that has had (nor does the Company have any
knowledge of any tax deficiency which, if determined
adversely to the Company, any Subsidiary or any Joint
Venture would be reasonably likely to have) a material
adverse effect on the financial condition, business or
results of operations of the Company and the
Subsidiaries and Joint Ventures taken as a whole.
(z) The financial statements of the Company and
its consolidated subsidiaries and the related notes and
schedules included or incorporated by reference in the
Registration Statement and the Prospectuses fairly
present the financial position, the results of
operations and the cash flows of the Company and its
consolidated subsidiaries at the respective dates and
for the respective periods to which they apply; such
financial statements and the related notes and
schedules have been prepared in conformity with United
States generally accepted accounting principles applied
on a consistent basis throughout the periods therein
specified. The capitalization of the Company, as set
forth in the column labeled "The Company" under the
caption "Capitalization" in the Prospectus, is
accurately described as of the date presented therein.
(aa) Since the date of the latest audited
financial statements included in the Prospectuses
(i) there has been no material adverse change, nor any
development or event involving a prospective material
adverse change, in the financial condition, business or
results of operations of the Company, the Subsidiaries
and Joint Ventures taken as a whole, and (ii) except as
disclosed in the Prospectuses, there have not been any
transactions entered into by the Company, the
Subsidiaries or any Joint Venture, other than those in
the ordinary course of business, which are material to
the Company, its Subsidiaries and Joint Ventures taken
as a whole; except as disclosed in the Prospectuses,
there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of
its capital stock.
(bb) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning
of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the
completion of the distribution of the Offered
Securities it commences doing such business.
(cc) Deloitte & Touche, who have certified certain
financial statements of the Company, and Coopers &
Lybrand, who have certified certain financial
statements of Magma Power Company ("Magma"), whose
reports appear in the Prospectuses or are incorporated
by reference therein, each are and were independent
public accountants as required by the Act and the Rules
and Regulations during the periods covered by the
financial statements on which they reported contained
or incorporated in the Prospectuses.
(dd) (i) Each of the operational electric
generation facilities ("Plants") owned in whole or
part, directly or indirectly by (A) the Company,
(B) the Subsidiaries or (C) the Joint Ventures is
located in the United States and is a "qualifying
cogeneration facility" ("QF") or a "qualifying small
power production facility" ("Small Power QF"), as such
terms are defined under the Federal Power Act, as
amended ("FPA"), and the regulations thereunder, and
has continuously been in compliance with the requirements
for being a QF or Small Power QF since it commenced sales
of electricity; (ii) the owner or operator of each of the
Plants under development by the Company, the Subsidiaries
or Joint Ventures and located in the United States will
either qualify as a QF, a Small Power QF or an "exempt
wholesale generator" ("EWG"), as such terms are defined
under the FPA, the Public Utility Holding Company Act
of 1935, as amended ("PUHCA") and the regulations
thereunder; (iii) the owner or operator of each of the
Plants under development by the Company, the
Subsidiaries or Joint Ventures and located outside the
United States will, no later than the date operations
commence, qualify either (A) as an EWG or (B) as a
"foreign utility company," as such term is defined
under PUHCA and the regulations thereunder; (iv) none
of the entities identified in clause (A) or (B) of
subparagraph (i) above owns or operates any electric
distribution facilities or any electric transmission
facilities other than electric transmission facilities
that are part of a QF or Small Power QF; and (v) none
of the entities identified in clause (A), (B) or (C) of
subparagraph (i) above is a "public utility holding
company" or a "subsidiary company" of a "public utility
holding company," as those terms are defined under
PUHCA or is subject to regulation under the FPA, other
than as contemplated by 18 C.F.R. Section 292.601(c),
or, except as described in the Registration Statement,
subject to regulation by any state law with respect to
rates or the financial or organizational regulation of
electric utilities.
3. Purchase, Sale and Delivery of Offered
Securities. On the basis of the representations, warranties
and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company agrees to sell
to the Managers, and the Managers agree, severally and not
jointly, to purchase from the Company, at a purchase price
of U.S.$ per share (representing the offering price
of U.S.$ per share less a selling concession of
U.S.$ per share), the respective numbers of shares of
International Firm Securities set forth opposite the names
of the Managers in Schedule A hereto.
The Company will deliver the International Firm
Securities to CSFBL for the accounts of the Managers, [If
delivery to be in different city from payment, insertat the
office of ,] against payment of the
purchase price in U.S. dollars by certified or official bank
check or checks in New York Clearing House (next day) funds
drawn to the order of at the office of
, at A.M., New York time, on
, or at such other time not later than
seven full business days thereafter as CSFBL and the Company
determine, such time being herein referred to as the "First
Closing Date". The certificates for the International Firm
Securities so to be delivered will be in definitive form, in
such denominations and registered in such names as CSFBL
requests and will be made available for checking and
packaging at the [above] office of ,
at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given
to the Company from time to time not more than 30 days
subsequent to the date of the initial public offering of the
Offered Securities, the U.S. Underwriters and the Managers
may purchase all or less than all of the Optional Securities
at the purchase price per Security to be paid for the Firm
Securities. The International Optional Securities to be
purchased by the Managers on any Optional Closing Date (as
defined below) shall be in the same proportion to all the
Optional Securities to be purchased by the Managers and U.S.
Underwriters on such Optional Closing Date as the
International Firm Securities bear to all the Firm
Securities and the U.S. Optional Securities to be purchased
by the U.S. Underwriters on any Optional Closing Date shall
be in the same proportion to all the Optional Securities to
be purchased by the U.S. Underwriters and the Managers on
such Optional Closing Date as the U.S. Firm Securities bear
to all the Firm Securities. The Company agrees to sell to
the Managers such International Optional Securities and the
Managers agree, severally and not jointly, to purchase such
International Optional Securities. Such International
Optional Securities shall be purchased for the account of
each Manager in the same proportion as the number of shares
of International Firm Securities set forth opposite such
Manager's name bears be the total number of shares of
International Firm Securities (subject to adjustment by
CSFBC to eliminate fractions). The Optional Securities may
be purchased by the U.S. Underwriters and the Managers only
for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No
Optional Securities shall be sold or delivered unless the
related Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to
purchase the Optional Securities or any portion thereof may
be exercised from time to time and to the extent not
previously exercised may be surrendered and terminated at
any time upon notice by CSFBC on behalf of the Managers and
the U.S. Underwriters to the Company.
Each time for the delivery of and payment for the
International Optional Securities, being herein referred to
as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional
Closing Date, if any, being sometimes referred to as a
"Closing Date"), shall be determined by CSFBC but shall be
not later than seven full business days after written notice
of election to purchase Optional Securities is given. The
Company will deliver the International Optional Securities
being purchased on each Optional Closing Date to CSFBL for
the accounts of the several Managers, against payment of the
purchase price therefor by certified or official bank check
or checks in New York Clearing House (next day) funds drawn
to the order of , at the [above]
office of . The certificates for
the International Optional Securities will be in definitive
form, in such denominations and registered in such names as
CSFBL requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and
packaging at the [above] office of ,
at a reasonable time in advance of the such Optional Closing
Date.
The Company will pay to the Managers as aggregate
compensation for their commitments hereunder and for their
services in connection with the purchase of the
International Securities and the management of the offering
thereof, if the sale and delivery of the International
Securities to the Managers provided herein is consummated,
an amount equal to U.S. $ per International Security,
which may be divided among the Managers in such proportions
as they may determine. Such payment will be made on the
First Closing Date in the case of the International Firm
Securities and on each Optional Closing Date in the case of
the International Optional Securities sold to the Managers
on such Closing Date in each case by way of deduction by the
Managers of said amount from the purchase price for the
International Securities referred to above.
4. Offering by Managers. It is understood that
the several Managers propose to offer the International
Securities for sale to the public, and upon the terms and
conditions, as set forth in the International Prospectus.
In connection with the distribution of the
International Securities, the Managers, through a
stabilizing manager, may over-allot or effect transactions
on any exchange, in any over-the-counter market or otherwise
which stabilize or maintain the market prices of the
International Securities at levels other than those which
might otherwise prevail, but in such event and in relation
thereto, the Managers will act for themselves and not as
agents of the Company, and any loss resulting from
over-allotment and stabilization will be borne, and any
profit arising therefrom will be beneficially retained, by
the Managers. Such stabilizing, if commenced, may be
discontinued at any time.
5. Certain Agreements of the Company. The
Company agrees with the several Managers that:
(a) If the Effective Time is prior to the
execution and delivery of this Agreement, the Company
will file each of the Prospectuses with the Commission
pursuant to and in accordance with subparagraph (1)
(or, if applicable and if consented to by CSFBL,
subparagraph (4)) of Rule 424(b) not later than the
earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the
fifth business day after the Effective Date. The
Company will advise CSFBL promptly of any such filing
pursuant to Rule 424(b).
(b) The Company will advise CSFBL promptly of any
proposal to amend or supplement the registration
statement as filed or either of the related
prospectuses or the Registration Statement or either of
the Prospectuses and will not effect such amendment or
supplementation without CSFBL's prior consent, which
consent shall not be unreasonably withheld; and the
Company will also advise CSFBL promptly of the
effectiveness of the Registration Statement (if the
Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or
supplementation of the Registration Statement or either
of the Prospectuses and of the institution by the
Commission of any stop order proceedings in respect of
the Registration Statement and will use its reasonable
best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if
issued.
(c) If, at any time when a prospectus relating to
the Offered Securities is required, in the opinion of
counsel for the Underwriters, to be delivered under the
Act in connection with sales by any U.S. Underwriter,
Manager or dealer any event occurs as a result of which
either or both of the Prospectuses as then amended or
supplemented would include an untrue statement of a
material fact or omit to state any material fact
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading, or if it is necessary at any such time to
amend either or both of the Prospectuses to comply with
the Act, the Company will promptly notify CSFBL of such
event and will promptly prepare and file with the
Commission, at its own expense, an amendment or
supplement which will correct such statement or
omission or an amendment which will effect such
compliance. Neither CSFBL's consent to, nor the
Managers' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) As soon as practicable, but not later than
the Availability Date (as defined below), the Company
will make generally available to its securityholders an
earnings statement (which need not be audited) covering
a period of at least 12 months beginning after the
Effective Date which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th
day after the end of the fourth fiscal quarter
following the fiscal quarter that includes the
Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the
end of such fourth fiscal quarter.
(e) The Company will furnish to the Managers
copies of the Registration Statement (six of which will
be signed and will include all exhibits), each
preliminary prospectus relating to the International
Securities, and, until completion of the distribution
of the International Securities as determined by CSFBL,
the International Prospectus and all amendments and
supplements to such documents, in each case as soon as
available and in such quantities as CSFBL requests.
The Company will pay the expenses of printing and
distributing to the Managers all such documents.
(f) No action has been or, prior to the
completion of the distribution of the Offered
Securities will be taken by the Company in any
jurisdiction outside the United States and Canada that
would permit a public offering of the Offered
Securities, or possession or distribution of the
International Prospectus, or any amendment or
supplement thereto, or any related preliminary
prospectus issued in connection with the offering of
the Offered Securities, or any other offering material,
in any country or jurisdiction where action for that
purpose is required.
(g) During the period of three years hereafter,
the Company will furnish to CSFBL and, upon request, to
each of the other Managers, as soon as practicable
after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company
will furnish to CSFBL (i) as soon as available, a copy
of each report and any definitive proxy statement of
the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other
information concerning the Company as CSFBL may
reasonably request.
(h) The Company will pay all expenses incident to
the performance of its obligations under this Agreement
and will reimburse the Managers (if and to the extent
incurred by them) for the filing fee of the National
Association of Securities Dealers, Inc. relating to the
Offered Securities, for any travel expenses of the
Company's officers and employees and any other expenses
of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered
Securities and for expenses incurred in distributing
preliminary prospectuses and the Prospectuses
(including any amendments and supplements thereto) to
the Managers. In addition to the foregoing, the
Underwriting Agreement provides that the Company will
pay to the U.S. Representatives on behalf of the U.S.
Underwriters and the Managers on the First Closing Date
the sum (for their respective accounts in proportion to
their commitments to purchase the Offered Securities
pursuant to this Agreement and the Underwriting
Agreement) contemplated in Section 5(h) of the
Underwriting Agreement. Such amount may be deducted
from the purchase price for the Offered Securities set
forth in Section 3. Except as provided in this
paragraph (h), the Underwriters and Managers shall pay
the Gleacher Success Fee in paragraph 2(g) hereof and
their own costs and expenses, including the costs and
expenses of their legal counsel, any transfer taxes on
the Offered Securities that they may sell and the
expenses of marketing and advertising any offering of
the Offered Securities made by them.
(i) The Company will indemnify and hold harmless
the Managers against any documentary, stamp or similar
issuance tax, including any interest and penalties, on
the creation, issuance and sale of the Offered
Securities and on the execution and delivery of this
Agreement. All payments to be made by the Company
hereunder shall be made without withholding or
deduction for or on account of any present or future
taxes, duties or governmental charges whatsoever unless
the Company is compelled by law to deduct or withhold
such taxes, duties or charges. In that event, the
Company shall pay such additional amounts as may be
necessary in order that the net amounts received after
such withholding or deduction shall equal the amounts
that would have been received if no withholding or
deduction had been made.
(j) For a period of 90 days after the date of the
initial public offering of the Offered Securities,
neither the Company nor its directors or officers will
offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act
relating to, any additional shares of their Securities
or securities convertible into or exchangeable or
exercisable for any shares of the Company's Securities, or
publicly disclose the intention to make any such offer,
sale, pledge, disposal or filing, without the prior
written consent of CSFBC, except issuances of
Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise
of warrants or options, in each case outstanding on the
date hereof. The Company shall, concurrently with the
execution of this Agreement, deliver to CSFBL an
agreement executed by each of the directors and
officers of the Company pursuant to which each such
person agrees, not to offer, sell, contract to sell,
pledge, grant any option to purchase, or otherwise
dispose of any of the Company's Securities or any
securities convertible into or exercisable or
exchangeable for such Securities for a period of 90
days after the date of the initial public offering of
the Offered Securities.
(k) The Company shall apply the net proceeds from
the sale of the Offered Securities as set forth in the
Prospectuses.
(l) The Company shall use its best efforts to
have the Offered Securities listed on the Stock
Exchanges concurrently with the Effective Time.
6. Conditions of the Obligations of the Managers.
The obligations of the several Managers to purchase and pay
for the International Firm Securities on the First Closing
Date and the International Optional Securities to be
purchased on each Optional Closing Date will be subject to
the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the
statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional
conditions precedent:
(a) The Managers shall have received a
letter, dated the date of delivery thereof (which, if
the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the
date of this Agreement or, if the Effective Time is
subsequent to the execution and delivery of the
Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the
registration statement to be filed shortly prior to the
Effective Time), of Deloitte & Touche and Coopers &
Lybrand, in the agreed form.
(b) If the Effective Time is not prior to
the execution and delivery of this Agreement, the
Effective Time shall have occurred not later than
8:00 P.M., New York time, on the date of this Agreement
or such later date as shall have been consented to by
CSFBL. If the Effective Time is prior to the execution
and delivery of this Agreement, each of the
Prospectuses shall have been filed with the Commission
in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted
or, to the knowledge of the Company or the Managers,
shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery
of this Agreement, there shall not have occurred (A) a
change in U.S. or international financial, political or
economic conditions or currency exchange rates or
exchange controls as would, in the judgment of CSFBL,
be likely to prejudice materially the success of the
proposed issue, sale or distribution of the
International Securities, whether in the primary market
or in respect of dealings in the secondary market, or
(B)(i) any change, or any development or event
involving a prospective change, in the financial
condition, business or results of operations of the
Company, the Subsidiaries and the Joint Ventures, taken
as a whole, which, in the judgment of CSFBL, is
material and adverse and makes it impractical or
inadvisable to proceed with completion of the public
offering or the sale of and payment for the
International Securities; (ii) any downgrading in the
rating of any debt securities or preferred stock of the
Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that
any such organization has under surveillance or review
its rating of any debt securities or preferred stock of
the Company (other than an announcement with positive
implications of a possible upgrading, and no
implication of a possible downgrading, of such rating);
(iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange [or
the London Stock Exchange], or any setting of minimum
prices for trading on such exchanges, or any suspension
of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iv) any
banking moratorium declared by U.S. Federal, New York
[or United Kingdom] authorities; or (v) any outbreak or
escalation of major hostilities in which the United
States is involved, any declaration of war by the
United States Congress or any other substantial
national or international calamity or emergency if, in
the judgment of CSFBL, the effect of any such outbreak,
escalation, declaration, calamity or emergency on the
financial markets makes it impractical or inadvisable
to proceed with completion of the public offering or
the sale of and payment for the International
Securities.
(d) The Managers shall have received
opinions, dated such Closing Date, of Steven A.
McArthur, General Counsel to the Company, and Willkie
Farr & Gallagher, special counsel to the Company, in
the agreed form.
(e) The Managers shall have received from
Chadbourne & Parke, counsel for the Managers, such
opinion or opinions, dated such Closing Date, with
respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such
Closing Date, the Registration Statement, the
Prospectuses and other related matters as the Managers
may require, and the Company shall have furnished to
such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(f) The Managers shall have received a
certificate, dated such Closing Date, of the President
or any Vice-President and a principal financial or
accounting officer of the Company in which such
officers shall state that, to the best of their
knowledge after reasonable investigation, the
representations and warranties of the Company in this
Agreement and the Underwriting Agreement are true and
correct, that the Company has complied with all
agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to such
Closing Date, that no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission and
that, subsequent to the date of the most recent
financial statements in the Prospectuses, there has
been no material adverse change, nor any development or
event involving a prospective material adverse change,
in the condition (financial or other), business,
properties or results of operations of the Company, the
Subsidiaries and the Joint Ventures taken as a whole
except as set forth in or contemplated by the
Prospectuses or as described in such certificate.
(g) The Managers shall have received
letters, dated such Closing Date, of Deloitte & Touche
and Coopers & Lybrand which meet the requirements of
subsection (a) of this Section, except that the
specified date referred to in such subsection will be a
date not more than five days prior to such Closing Date
for the purposes of this subsection.
(h) The merger of CE Acquisition Company,
Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company, with and into Magma pursuant
to the All-Cash Option (defined in the Prospectuses)
shall have become effective and all required filings in
respect thereof shall have been made in the States of
Nevada and Delaware.
(i) On such Closing Date, the U.S.
Underwriters shall have purchased the U.S. Firm
Securities or the U.S. Optional Securities, as the case
may be, pursuant to the Underwriting Agreement.
(j) Since the date of the latest audited
financial statements included or incorporated by reference
in the Prospectuses (i) except as disclosed in the
Prospectuses, there shall have been no material adverse
change, or a development which is reasonably likely to
lead to a material adverse change, in the financial condition,
business or results of operations of the Company, the
Subsidiaries and Joint Ventures taken as a whole and (ii)
except as disclosed in the Prospectuses, there shall not have
been any transactions entered into by the Company, the
Subsidiaries or any Joint Venture, other than those in
the ordinary course of business, which are material and
adverse to the Company, the Subsidiaries and Joint
Ventures taken as a whole, and which, in the judgment
of the Representatives, make it impracticable or
inadvisable to proceed with the public offering or the
delivery of the Offered Securities on the terms and in
the manner contemplated in the Prospectuses.
Documents described as being "in the agreed form" are
documents which are in the forms which have been initialed
for the purpose of identification by Chadbourne & Parke,
copies of which are held by the Company and CSFBL with such
changes as CSFBL may approve. The Company will furnish the
Managers with such conformed copies of such opinions,
certificates, letters and documents as the Managers
reasonably request, CSFBL may in its sole discretion waive
on behalf of the Managers compliance with any conditions to
the obligations of the Managers hereunder, whether in
respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The
Company will indemnify and hold harmless each Manager
against any losses, claims, damages or liabilities, joint or
several, to which such Manager may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus,
or arise out of or based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
(with respect to the Prospectuses, in light of the
circumstances under which they were made) not misleading,
and will reimburse each Manager for any legal or other
expenses reasonably incurred by such Manager in connection
with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon
an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Manager
through CSFBL specifically for use therein, it being
understood and agreed that the only information furnished by
any Manager consists of the information described as such in
subsection (b) below; and provided, further, that, with
respect to any untrue statement or omission in any
Preliminary Prospectuses, this indemnity agreement shall not
inure to the benefit of any Manager on account of any loss,
claim, damage, liability or action arising from the sale of
any Offered Securities to any person by that Manager if that
Manager failed to send or give a copy of the Prospectuses,
as the same may be amended or supplemented, to that person
within the time required by the Act, and the untrue
statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in
such Preliminary Prospectuses was corrected in the
Prospectuses and the Prospectuses were made available to the
Managers prior to the sale of the Offered Securities. For
purposes of the last proviso to the immediately preceding
sentence, the term "Prospectuses" shall not be deemed to
include the documents incorporated by reference therein, and
no Manager shall be obligated to send or give any supplement
or amendment to any document incorporated by reference in
any Preliminary Prospectuses or Prospectuses to any person
other than a person to whom such Manager had delivered such
incorporated document or documents in response to a written
request therefor.
Insofar as the foregoing indemnity agreement, or
the representations and warranties contained in Section
2(b), may permit indemnification for liabilities under the
Act of any person who is a Manager or a partner or
controlling person of a Manager within the meaning of
Section 15 of the Act and who, at the date of this
Agreement, is a director, officer or controlling person of
the Company, the Company has been advised that in the
opinion of the Commission such provisions may contravene
Federal public policy as expressed in the Act and may
therefore be unenforceable. In the event that a claim for
indemnification under such agreement or such representations
and warranties for any such liabilities (except insofar as
such agreement provides for the payment by the Company of
expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action,
suit or proceeding) is asserted by such a person, the
Company will submit to a court of appropriate jurisdiction
(unless in the opinion of counsel for the Company the matter
has already been settled by controlling precedent) the
question of whether or not indemnification by it for such
liabilities is against public policy as expressed in the Act
and therefore unenforceable, and the Company will be
governed by the final adjudication of such issue.
(b) Each Manager will severally and not jointly
indemnify and hold harmless the Company against any losses,
claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement, either of the
Prospectuses, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf
of such Manager through CSFBL specifically for use therein,
and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action
as such expenses are incurred, it being understood and
agreed that the only such information furnished by any
Manager consists of the following information in the
International Prospectus furnished by or on behalf of each
Manager: the last paragraph at the bottom of the cover page
concerning the terms of the offering by the Managers, the
legend concerning over-allotments and stabilizing on page 2,
the legend concerning transactions by certain affiliates
participating in the distribution on page 2, the concession
and reallowance figures appearing in the fifth paragraph
under the caption "Subscription and Sale" and under
paragraphs 6, 7, 8, 9, 12, 13 and 14 under the caption
"Subscription and Sale".
(c) Promptly after receipt by an indemnified
party under this Section of notice of the commencement of
any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise
than under subsection (a) or (b) above except to the extent
it has been materially prejudiced by such failure; and provided,
further, that such omission will not relieve it from any liability
which it may otherwise have to an indemnified party. In case any
such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of
the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation, provided, however, that the
indemnified party shall have the right to employ counsel to
represent the indemnified party and their respective
controlling persons who may be subject to liability arising
out of any claim in respect of which indemnity may be sought
by the indemnified party against the indemnifying party
under this Section 7 if the employment of such counsel shall
have been authorized in writing by the indemnifying party in
connection with the defense of such action or, if in the
written opinion of counsel to either the indemnifying party
or the indemnified party, representation of both parties by
the same counsel would be inappropriate due to actual or
likely conflicts of interest between them, and in that event
the fees and expenses of one firm of separate counsel (in
addition to the fees and expenses of local counsel) shall be
paid by the indemnifying party. No indemnifying party
shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above, then
each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Managers on the other from
the offering of the International Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the
one hand and the Managers on the other in connection with
the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by
the Company on the one hand and the Managers on the other
shall be deemed to be in the same proportion as the total
net proceeds from the offering of the International
Securities (before deducting expenses) received by the
Company bear to the total underwriting discounts and
commissions received by the Managers. The relative fault
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the
Managers and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or
claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no
Manager shall be required to contribute any amount in excess
of the amount by which the total price at which the
International Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount
of any damages which such Manager has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Managers' obligations in this
subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this
Section shall be in addition to any liability which the
Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls
any Manager within the meaning of the Act; and the
obligations of the Managers under this Section shall be in
addition to any liability which the respective Managers may
otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer
of the Company who has signed the Registration Statement and
to each person, if any, who controls the Company within the
meaning of the Act.
8. Default of Managers. If any Manager or
Managers default in their obligations to purchase
International Securities hereunder on either the First or
any Optional Closing Date and the aggregate number of shares
of International Securities that such defaulting Manager or
Managers agreed but failed to purchase does not exceed 10%
of the total number of shares of International Securities
that the Managers are obligated to purchase on such Closing
Date, CSFBL may make arrangements satisfactory to the
Company for the purchase of such International Securities by
other persons, including any of the Managers, but if no such
arrangements are made by such Closing Date the non-
defaulting Managers shall be obligated severally, in
proportion to their respective commitments hereunder, to
purchase the International Securities that such defaulting
Managers agreed but failed to purchase on such Closing Date.
If any Manager or Managers so default and the aggregate
number of shares of International Securities with respect to
which such default or defaults occur exceeds 10% of the
total number of shares of International Securities that the
Managers are obligated to purchase on such Closing Date and
arrangements satisfactory to CSFBL and the Company for the
purchase of such International Securities by other persons
are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of
any non-defaulting Manager or the Company, except as
provided in Section 9 (provided that if such default occurs
with respect to International Optional Securities after the
First Closing Date, this Agreement will not terminate as to
the International Firm Securities or any International
Optional Securities purchased prior to such termination).
As used in this Agreement, the term "Manager" includes any
person substituted for a Manager under this Section.
Nothing herein will relieve a defaulting Manager from
liability for its default.
9. Survival of Certain Representations and
Obligations. The respective indemnities, agreements,
representations, warranties and other statements of the
Company or its officers and of the several Managers set
forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of
any Manager, the Company or any of their respective
representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the
International Securities. If this Agreement is terminated
pursuant to Section 8 or if for any reason the purchase of
the International Securities by the Managers is not
consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Company and the
Managers pursuant to Section 7 shall remain in effect and if
any International Securities have been purchased hereunder
the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If
the purchase of the International Securities by the Managers
is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in Section 6(c)(A)
or clause (iii), (iv) or (v) of Section 6(c)(B), the Company
will reimburse the Managers for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the
International Securities.
10. Notices. All communications hereunder will
be in writing and, if sent to the Managers, will be mailed,
delivered or telexed and confirmed to CSFBL at One Cabot
Square, London E14 4QJ England, Attention: Company
Secretary, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at
, Attention: ;
provided however, that any notice to a Manager pursuant to
Section 7 will be mailed, delivered or telexed and confirmed
to such Manager.
11. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Managers. CSFBL will act
for the several Managers in connection with this financing,
and any action under this Agreement taken by CSFBL will be
binding upon all the Managers.
13. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together
constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of New York, without regard to principles of
conflicts of laws.
The Company hereby submits to the non-exclusive
jurisdiction of the Federal and state courts in the Borough
of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
If the foregoing is in accordance with the
Managers' understanding of our agreement, kindly sign and
return to us the Company of the counterparts hereof,
whereupon it will become a binding agreement between the
Company and the several Managers in accordance with its
terms.
Very truly yours,
CALIFORNIA ENERGY COMPANY, INC.
By
[Insert title]
The foregoing Subscription Agreement is
hereby confirmed and accepted as of
the date first above written.
CS FIRST BOSTON LIMITED
By:
[Insert title]
Bear, Stearns International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
Deutsche Bank Aktiengesellschaft
Lehman Brothers International (Europe)
Each by its duly authorized attorney-in-fact:
[Insert name]
SCHEDULE A
Manager Number of
International
Firm Securities
CS First Boston Limited . . . . .
Bear, Stearns International Limited . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation. . . . .
Deutsche Bank Aktiengesellschaft
Lehman Brothers International (Europe). . . . . . . . . . .
Total . . . . . . . . . . . . . 4,000,000
SCHEDULE B
I. List of Subsidiaries
Coso Hotsprings Intermountain Power, Inc. (CHIP)
Incorporated in Delaware
Capital Stock: Owned 100% by California Energy
Company, Inc. ("Parent")
China Lake Operating Co. (CLOC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
Coso Technology Corporation (CTC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
China Lake Geothermal Management Company (CLGMC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
China Lake Plant Services, Inc. (CLPSI)
Incorporated in California
Capital Stock: Owned 100% by Parent
Coso Hotsprings Overland Power, Inc. (CHOP)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
CE Geothermal, Inc. (CEG)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
Western States Geothermal Company (WSG)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
Intermountain Geothermal Company (IGC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
California Energy Development Corporation (CEDC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
California Energy Yuma Corporation (CEYC)
Incorporated in Utah
Capital Stock: Owned 100% by CEDC
Yuma Cogeneration Associates (YCA)
Formed in Utah
General Partnership: Owned 50% by CEDC; 50% by CEYC
Rose Valley Properties, Inc. (RVP)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
The Ben Holt Co. (BHC)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
CBE Engineering Co. (CBE)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
Kennebec Construction, Co. (KCC)
Incorporated in California
Capital Stock: Owned 100% by BHC
CE Exploration Company (CEX)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
CE Newberry, Inc. (CEH)
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
CE Acquisition Company, Inc.
Incorporated in Delaware
Capital Stock: Owned 100% by Parent
CE International Investments Ltd. (CEII)
Incorporated in Bermuda
Capital Stock: Owned 100% by Parent
CE Philippines Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
Ormat Cebu Ltd.
Incorporated in Bermuda
Capital Stock: Owned 48% by CEII; 52% by
CE Philippines, Ltd.
CE Cebu Geothermal Power Company, Inc.
Incorporated in the Philippines
Capital Stock: Owned 52% by Ormat Cebu Ltd.; 48% by CE
Philippines Ltd.
CE Indonesia Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
Bali Energy Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CE Bali Ltd. (P.T.
Pandanwangi Sekartaji has the right to purchase up
to 40% of the equity for this project)
CE Casecnan Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
CE Singapore Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
California Energy International Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
CE Casecnan Water and Energy Company, Inc.
Incorporated in the Philippines
Capital Stock: Owned 100% by CE Casecnan Ltd.;
La Prairie Group Contractors (International) Ltd. and
San Lorenzo Ruiz Builders & Developers Group, Inc.
each are entitled to a 15% equity interest
CE Bali Ltd.
Incorporated in Bermuda
Capital Stock: Owned 100% by CEII
Magma Operating Company
Incorporated in Nevada
Formerly Red Hill Geothermal, Inc. (9/17/87 - 3/29/93)
Formerly Salton Sea Geothermal, Inc. (9/14/87 - 9/17/87)
Capital Stock: Owned 100% by Magma Power Company
Salton Sea Power Company
Incorporated in Nevada
Capital Stock: Owned 100% by Magma Power Company
Vulcan Power Company
Incorporated in Nevada
Formerly Magmamax (1/25/72 - 6/24/81)
Formerly Magma Properties (10/21/69 - 1/25/72)
Capital Stock: Owned 100% by Magma Power Company
Imperial Magma
Incorporated in Nevada
Formerly Impak Mining Company (6/25/69 - 11/8/74)
Capital Stock: Owned 100% by Magma Power Company
Magma Land Company I
Incorporated in Nevada
Capital Stock: Owned 100% by Magma Power Company
Desert Valley Company
Incorporated in California
Capital Stock: Owned 100% by Magma Power Company
Fish Lake Power Company
Incorporated in Delaware
Formerly MPC Properties, Inc. (3/26/90 - 3/13/92)
Capital Stock: Owned 100% by Magma Power Company
Magma Netherlands, B.V.
Formed in the Netherlands
Formerly Haremhab Investments B.V. (4/3/93 - 5/20/94)
LLC Interest: Owned 100% by Magma Power Company
Visayas Geothermal Power Company
Formed in the Philippines
Partnership Interests: Magma Netherlands, B.V.
99% General Partner; Tongonan Power Investment, Inc.
1% General Partner
Tongonan Power Investment, Inc.
Incorporated in the Philippines
Capital Stock: Owned 100% by Magma Power Company
Salton Sea Brine Processing L.P.
Formed in California
Partnership Interests: Salton Sea Power Company 99%
General Partner; Magma Power Company 1% Limited Partner
Salton Sea Power Generation L.P.
Formed in California
Partnership Interests: Salton Sea Power Company 99%
General Partner; Magma Power Company 1% Limited Partner
II. List of Joint Ventures
Coso Energy Developers (CED)
Formed in California
General Partnership: 48% CHIP; 52% Caithness Coso
Holdings, L.P.
Coso Finance Partners (CFP)
Formed in California
General Partnership: 46.3% owned by CLOC; 53.7%
owned by ESCA I, L.P.
Coso Power Developers (CPD)
Formed in California
General Partnership: 50% owned by CTC; 50% by
Caithness Navy II
Coso Funding Corp. (CFC)
Incorporated in Delaware
General Partnership: Owned 33% by CFP; 35% by CPD;
32% by CED
Coso Transmission Line Partners (CTLP)
Formed in California
General Partnership: Owned 50% by CED; 50% by CPD
Coso Finance Partners II (CFP II)
Formed in California
General Partnership: Owned 50% by CLGMC, 50%
by ESCA II, L.P.
China Lake Joint Venture (CLJV)
Formed in California
General Partnership: Owned 50%
by Parent; 50% by Caithness Geothermal 1980, Ltd.
Coso Land Company (CLC)
Formed in California
General Partnership: Owned 50% by Parent;
50% by Caithness Geothermal 1980, Ltd.
Coso Geothermal Company (CGC)
Formed in California
General Partnership: Owned 57% by CLC; 16% by Parent
CE Luzon Geothermal Power Company, Inc.
Incorporated in the Philippines
Capital Stock: Owned 50% by CE Mahanagdong Ltd.;
50% by Kiewit Energy International (Bermuda) Ltd.;
an industrial company has the right to acquire 10%
of the equity - 5% from CE Mahanagdong Ltd. and 5%
from Kiewit Energy International (Bermuda) Ltd.
Himpurna California Energy Ltd.
Incorporated in Bermuda
Capital Stock: Owned 90% by CE Indonesia Ltd., 10%
by P.T. Himpuma Enersindo Abadi; California Energy
International Ltd. has an option to acquire an
interest in P.T. Himpuma or its project company
shares equal to up to 4% of the project company;
under the Joint Operating Contract, Pertamina has
certain rights to acquire up to a 25% interest in the
Joint Operating Contract, but not under the Energy
Sales Contract
Patuha Power, Ltd.
Incorporated in Bermuda
Capital Stock: Owned 90% by CE Singapore Ltd.;
10% by P.T. Enersindo Supra Abadi; P.T. Enersindo
Supra Abdai has the right to acquire an additional
20% of the project equity in certain circumstances
and for a limited time; under the Joint Operating
Contract, Pertamina has certain rights to acquire up
to a 25% interest in the Joint Operating Contract,
but not under the Energy Sales Agreement
Vulcan/BN Geothermal Power Company
Formed in Nevada
Partnership Interests: Vulcan Power Company 50%
General Partner; BN Geothermal, Inc. 50% General
Partner
Del Ranch, L.P.
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; Magma Operating Company 40% General
Partner; Conejo Energy Company 10% Limited Partner
and 40% General Partner
Elmore, L.P.
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; Magma Operating Company 40% General
Partner; Niguel Energy Company 10% Limited Partner
and 40% General Partner
Leathers, L.P.
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; Magma Operating Company 40% General
Partner; San Felipe Energy Company 10% Limited Partner
and 40% General Partner
SCHEDULE C